#TEKSYSTEMS TIME AND EXPENSE REGISTRATION#
Question: What if an eligible borrower contracts with a third-party payer such as a payroll provider or a Professional Employer Organization (PEO) to process payroll and report payroll taxes?Īnswer: SBA recognizes that eligible borrowers that use PEOs or similar payroll providers are required under some state registration laws to report wage and other data on the Employer Identification Number (EIN) of the PEO or other payroll provider.
Specifically, in FAQ 10, the SBA says a borrower is entitled to forgiveness for payroll costs paid for employees whose state law employer of record is a PEO. PEO status is important because the SBA says it is – in an FAQ that is generally favorable to many borrowers. However, the treatment of temporary employees employed by a staffing agency (aka "temp agency" or employee leasing company) depends on whether the staffing agency constitutes a Professional Employer Organization (PEO) or similar payroll provider. Similarly, compensation paid to temporary employees who are on a borrower's payroll constitutes payroll costs for purposes of PPP forgiveness. The answer is a resounding maybe.Īs a threshold matter, there is no doubt that temporary employees count toward the 500 employee limit for general PPP eligibility.įor purposes of the 500-employee threshold, all employees must be counted, whether full-time, part-time, or employed on some other basis ( including employees obtained from a temporary employee agency, professional employer organization, or leasing concern).
A recurring question about Paycheck Protection Program (PPP) loans is whether compensation paid to temporary employees qualify as forgivable payroll costs.
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